Rights and Liabilities of the Beneficiary: Complete Notes (Part F)

Part F covers Chapter VI of the Act (Sections 55 to 69): what the beneficiary is entitled to, the remedies he has against the trustee, his power to follow and trace trust property into other hands, and the liabilities of a beneficiary who takes part in a breach. This consolidated note covers Topics 25 to 28.

1. Rights in the Trust (Sections 55 to 58)

Section	Right
55	To the rents and profits of the trust property, subject to the instrument
56	To have the author's intention specifically executed to the extent of his interest; a sole competent beneficiary, or several competent beneficiaries all of one mind, may require transfer of the property to them or as they direct (Saunders v Vautier, 1841); the married woman proviso is historical
57	To inspect and copy the instrument, title documents relating solely to the trust property, accounts and vouchers, and cases submitted and opinions taken by the trustee, against the trustee and those claiming under him with notice
58	If competent to contract, to transfer his interest, subject to the law on disposition

2. Remedies against the Trustee (Sections 59 to 62)

Execution by the court (Section 59): where there is no trustee, all have died, disclaimed or been discharged, or execution by the trustee is impracticable, the beneficiary may sue and the court executes the trust until a trustee is appointed.
Proper trustees (Section 60): proper persons in a proper number; enforced by removal, new appointment and, if needed, a receiver.
Compulsion and injunction (Section 61): the trustee may be compelled to perform any act of duty and restrained from a contemplated or probable breach.
Wrongful purchase (Section 62): property wrongfully bought by the trustee may be declared subject to the trust or retransferred, by him or by a purchaser with notice, ordinarily on accounting for the price and proper expenses.

These sit alongside compensation under Section 23. No limitation period bars a suit against an express trustee to follow trust property in his hands (Limitation Act, Section 10).

3. Following and Tracing (Sections 63 to 67)

Section	Rule
63	Follow trust property into a third person's hands and obtain an admission or declaration; trace proceeds in the hands of the trustee, his legal representative or legatee, with rights as nearly as may be the same
64	No right against a transferee in good faith for consideration without notice (at payment or conveyance), or a transferee for consideration from him; an attaching judgment creditor is not protected
65	Property reacquired by the wrongdoing trustee is again subject to the trust, despite intervening protected transferees
66	Wrongful mingling gives a charge on the whole fund for the amount due
67	Co-partners of a partner-trustee who used trust property in the firm are not personally liable without notice

4. Liabilities of Beneficiaries (Sections 68 and 69)

Where one of several beneficiaries joins in a breach, knowingly obtains an advantage from it without the others' consent, conceals or fails to act on a known breach, or deceives the trustee into it, the others may have all his beneficial interest impounded, against him and those claiming under him (except transferees for consideration without notice of the breach), until the loss is compensated (Section 68). This complements the Section 23 bar on suits by a beneficiary who induced, concurred in or acquiesced in a breach, and the trustee's charge under Section 33. A beneficiary's transferee takes his rights and liabilities as they stood at the date of transfer (Section 69), and should give the trustee notice (Section 28).

⚠ Key point

Part F in one line: the beneficiary is entitled to the income, to specific execution and (if all are competent and agree) to the property itself, to inspection of the trust's documents and to transfer his interest; he can have the court execute the trust, insist on proper trustees, compel performance and restrain breach, and recover property the trustee wrongly bought; he can follow and trace trust property and claim a charge on mixed funds against everyone except a bona fide purchaser for value without notice; and a beneficiary who takes part in a breach has his interest impounded to make good the loss.

5. The Topics of This Part

Topic 25: Rights of the beneficiary, including Saunders v Vautier (Sections 55 to 58)
Topic 26: The beneficiary's remedies against the trustee (Sections 59 to 62)
Topic 27: Following and tracing trust property (Sections 63 to 67)
Topic 28: Liabilities of beneficiaries and their transferees (Sections 68 and 69)